The study examines how audit firms changed their policies regarding audit partner performance measurement, career development, and compensation during a period of heightened public scrutiny of audit quality (2007–2017).
Implementing such policy changes requires a delicate transition in organizational design and internal processes and may not always translate effectively into day-to-day practices. Using proprietary performance management policies and individual partner performance and compensation data from the eight largest Dutch audit firms provides an in-depth understanding of the evolution of performance management for audit partners.
Findings indicate that most policy changes have real consequences. For example, audit quality becomes more influential in career development, while profit sharing is increasingly linked to quality and long-term performance.
Overall, audit firms appear responsive to public scrutiny, aligning partner incentives more closely with societal expectations of audit quality.
